Hard Inquiries and Bankruptcy

Anyone who has ever been chased by bill collectors knows two things. First, they are relentless in their pursuit of trying to collect, and secondly, many of them know very little about law.

This personal bankruptcy story was posted on the internet in March of 2011, “I have been living abroad for almost 10 years. I have decided it is time to move back to the states one year from now. I had intended to pay off my debt once I got settled, but we all know that story. Anyway, I have been doing as much research as possible to figure to whom I owe money and how much. I started by obtaining a copy of my credit report. I was surprised to see there was virtually nothing on it. There were, however, a couple of hard inquiries from collection agencies. I continued researching the options I have to start paying off my debt. That’s when I came across the subject of the statute of limitations for debt. Now, I am not looking to dodge my debt. My first priority is to improve my credit score so that I can get basic things such as a place to stay, a job, utilities, etc. My credit score is 634, and I understand that my low score is attributed to inactivity and hard inquiries. What I want to know is can the collection agencies legally continue to perform hard inquiries and how do I approach paying off the debt while satisfying my priority of increasing my credit score?”

Hard inquiries occur when a business inquires into your credit history. A good example of a hard inquiry is when a bank is issuing a loan and inquires into a customer’s credit. Hard inquiries may negatively impact your credit score. They are allowed to stay on your credit report for two years. Theoretically, the purpose of allowing hard inquiries to remain on your credit report is to warn other lenders and let them know you have borrowed money, or attempted to borrow money, and you may be overextending yourself.

According to the Fair Credit Reporting Act (FCRA), only people with legitimate business needs can access your credit information. Each inquiry made will appear only on the applicable report. That is why you have different scores from different reporting agencies, along with the fact the agencies tend to score a little differently. Not all businesses who issue credit make hard inquiries to every reporting agency.

Does a collection agency have a right to make credit inquiries? Unfortunately, the answer is yes. The FCRA contains a provision stating that, should a company need to collect a debt from an individual, it can pull the credit report without notifying him of their intentions and without obtaining permission.

What can you do about collection agencies hurting your credit score? A collection agency only has the legal right to pull credit reports on consumers who actually owe debts to the company they represent. If you do not owe a debt to the company, the agency cannot legally access your records. If the agency even mistakenly makes an inquiry, you have the right to remedy the problem on your credit report. You can do this by notifying the collection agency in question and having them prove the debt really exists. If they cannot, the FCRA says they have to remove the hurtful information from your credit report. If they fail to to remove the information, you have grounds to press the issue in a court of law.

If a collection agency represents a legitimate debt and they are making hard inquiries, it can hurt your credit score. What usually happens is that your credit scores will lower, and it can hurt your chances of obtaining credit in the future. When legitimate collection activities have gone this far, it can be an indication that you are bankrupt.

It is very important for the average person to keep up with his or her credit report and credit scores. When your score goes down drastically, the people who issue credit, like banks, rental companies, stores, mortgage companies, utilities, and apartments might think you are nearing bankruptcy, and they may be less likely to extend you credit. If this happens you might have a hard time renting and you may have to pay higher deposits and interest rates. It may also be more difficult to obtain a credit card.

If your credit scores are low and you fear you may be bankrupt, you may need a bankruptcy lawyer. Bankruptcy lawyers can analyze your financial situation and help you determine the best course of action. If you need relief from the stress associated with debt and you live in or around the metropolitan area of Columbus, Ohio, contact us at www.betterbankruptcy.com . We will help you find a bankruptcy attorney in your area who can answer your bankruptcy questions.

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